The “ tuna bond ” scandal that shook Mozambique’s economy is washing into a US court, where a former Mozambican finance minister is being tried on charges that he took bribes to commit his country – secretly – to huge loans that prosecutors say got looted.

When the loans – supposed to go in part to tuna fishing ships – went bad and the government’s $2 billion in “hidden debt” came to light in 2016, a financial crisis erupted in Mozambique, one of the world’s poorest countries.

Jurors began hearing the case this week against Manuel Chang, the African nation’s top financial official from 2005 to 2015. Chang “abused his authority to enrich himself through bribery, fraud and money laundering,” Assistant US Attorney Peter Cooch said during opening statements this week in a federal court in Brooklyn.

Chang has pleaded not guilty to conspiracy charges. Defence lawyer Adam Ford told jurors there’s no evidence that Chang agreed to take payoffs, or received a penny, in exchange for having Mozambique guarantee that the loans would be repaid.

“Minister Chang signs these guarantees because that’s what his government wanted him to do,” Ford said Tuesday.

A key prosecution witness was on the stand on Wednesday as Chang followed along closely via a Portuguese language interpreter. Between 2013 and 2016, three Mozambican-government-controlled companies quietly borrowed $2 billion from major overseas banks – and the government, with Chang’s signature, assured repayment.

The money was supposed to go to tuna fishing ships, a shipyard and Coast Guard vessels and radar systems to protect natural gas fields off the country’s Indian Ocean coast.

But prosecutors say huge chunks of the loan proceeds went to bribes and kickbacks to bankers and government officials – including $7 million to Chang himself, wired through US banks to accounts in Europe that were under an associate’s name.

Prosecutors contend Chang was just trying to cover his tracks by sending the money to a friend’s account. Chang’s defence maintains there’s no proof that he actually got the money.

The first witness, former Credit Suisse banker Andrew Pearse, testified on Tuesday and Wednesday about his involvement in the loans, which he said netted him $45 million in kickbacks. He has pleaded guilty and is awaiting sentencing.

The government guarantees that Chang inked were crucial because the brand-new companies “were not good enough risks for the banks to lend money to” without a backstop, Pearse said.

although he testified that he met Chang twice, the defence has said the two never entered into any agreement. Defence lawyers haven’t yet had their turn to question Pearse, but Ford portrayed him during opening statements as a government cooperator anxious to garner leniency with his testimony.

Before the emergence of Mozambique’s $2 billion debt – about 12 per cent of the nation’s gross domestic product at the time – it was one of the world’s 10 fastest-growing economies for two decades, according to the World Bank.

The scandal had a seismic impact on the country’s economy. Growth stagnated, the currency lost value, inflation surged and foreign investors lost confidence. The International Monetary Fund withdrew its support for the country.

A 2021 report by the Chr Michelsen Institute, a development research body in Norway, estimated that the loans could ultimately cost Mozambique around $11 billion – around 60 per cent of its current GDP. The institute said the crisis also likely forced nearly two million Mozambicans into poverty as international investment and aid slowed drastically and the government cut services to raise money.

As of last year, Mozambique was among the 10 countries worldwide with the lowest GDP per capita, according to the World Bank.

Mozambique’s government has reached out-of-court agreements with creditors in an attempt to pay down some of the debt. Last year, it paid $142 million back to Credit Suisse – in cash and local currency bonds – to cover original loans of about $522 million from the Switzerland-based banking giant, according to the World Bank.

Mozambique also recently reached an agreement on a $220-million settlement with Russia’s VTB Bank and Portugal’s BCP Bank. In 2021, Credit Suisse agreed to pay at least $475 million to British and US authorities to settle bribery and kickback allegations stemming from the bank’s involvement with the corrupt loans.

In Mozambique, at least 10 people have been convicted and sentenced to prison over the scandal, including Ndambi Guebuza, the son of former Mozambican President Armando Guebuza.

South African courts dismissed the Mozambican government’s attempts to have Chang face charges there. Some Mozambican activists argued that he would be treated too leniently in his homeland and should be sent to the US instead.

The US criminal cases have had mixed results. Pearse and two other British bankers have pleaded guilty, but a jury in 2019 acquitted another defendant, Jean Boustani, a shipbuilding company executive who’s from Lebanon.

Three other defendants aren’t in US custody. One is another Lebanese shipbuilding executive. The other two are Mozambican ex-officials.

Chang was arrested at Johannesburg’s main international airport in late 2018, shortly before the US indictment became public. After years of fighting extradition from South Africa, he was brought to the US last year.

His lawyers tried to get the case thrown out. Among their arguments: that prosecutors overshot the reach of US securities law and that Chang is immune from prosecution as a former foreign official. US District Judge Nicholas Garaufis turned them down.

• An AP report